Ralcorp's Post to incur $15M-$20M spinoff charges

BenFox

Ralcorp Holdings Inc.
RAH
said it expects its Post Foods cereal business will incur a total of $15 million to $20 million in one-time separation costs during the two years after Post is spun off.

Post hopes its spinoff from food maker Ralcorp, which will retain its large private-label food business, will create a more focused company that can attack the cereal category better. Post Holdings Inc. will own the Post business, which includes brand like Honey Bunches of Oats, Pebbles and Grape Nuts.

For its fiscal first quarter, which ended Dec. 31, Ralcorp said its branded cereal products segment's operating earnings were expected to come in at $33 million to $37 million, with net sales of $210 million to $220 million. It said its results were hurt by a reduction in trade spending towards the end of the period.

Ralcorp's board expects to use proceeds of about $900 million from the spinoff to reduce debt, pursue other private-brand acquisitions, and make additional stock repurchases under its remaining buyback authorization of about 5 million shares.

In November, Ralcorp said it swung to a fiscal fourth-quarter loss as the food maker recorded impairment charges and other items, though revenue increased.

Shares closed Friday at $85.91 and were inactive premarket. The stock is up 7.8% over the past three months.

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